Term Insurance Riders - All You Need To Know

Opting for the term life insurance plan with the right cover is one of your best investment instruments to safeguard your family’s financial future.

If you are the only breadwinner in your family, a term plan secures your family financially in case of your untimely death. The sum assured in a term plan ensures your family is back on their feet financially to carry on life as you have planned for them even in your absence.

So, it’s imperative to make the right decision. And, to make the right decision for your family, you must know all the various components of a term plan. One of the important components of term insurance is riders.

Term insurance riders are optional add-ons to widen your base plan coverage on occurrence of a rider-specific unfortunate event.

The right choice of term life insurance riders would help your family with an additional rider cover at the time of claim as per the rider plan.

The right term plan will be the shield for your family. Adding a term plan rider strengthens that financial shield further.

Let’s understand how term plan riders work with an example.

Case 1: Simple term plan with INR 1 crore cover without any rider
In case a life assured passes away in an unfortunate car accident, then the nominee or beneficiary would be provided with the sum assured, i.e. INR 1 crore.
So, the life insurance company would provide INR 1 crore to the nominee.

Case 2: Term plan with INR 1 crore with INR 40 lakhs accidental death benefit rider cover
In case a life assured passes away in an unfortunate car accident, then the nominee or beneficiary would be provided not only with the sum assured but also, with the accidental death benefit rider cover, i.e. INR 1 crore + INR 40 lakhs.

So, the life insurance company would provide INR 1.4 crore to the nominee.

That’s how the term insurance riders work and strengthen the shield further with additional coverage in case of a rider-specific occurrence at an affordable price. It is important to know that there are terms and conditions for each rider and rider-specific event occurrence for which the claim would be accepted.

Let’s understand different types of term insurance riders and how they work.

1. Accidental Death Benefit Rider
If the life assured passes away due to accidental death, the nominee is benefited from the sum assured under the term plan plus the rider plan cover.
There are a few crucial points to keep in mind: The life assured may not die on the spot in case of an accident. Even in such cases, the rider cover will be paid if the life assured dies within 180 days of the occurrence of the unfortunate accident.
It is important to know such details of the benefits provided under a term plan rider. As such accidents are quite unpredictable, an accidental death benefit rider should be opted by anyone who commutes or travels by personal vehicle or public transport. Or anyone who wants to provide an additional sum assured to their family in such a rider-specific accidental death.

2. Accidental Death and Disability Rider
Accidental Death and Disability rider is in a similar line to that of the accidental death benefit rider but also covers permanent disability due to an accident. In case of an accidental total and permanent disability due to the loss of hand(s), leg(s), loss of hearing in ear(s), loss of sight in eye(s), partial or total rider cover is paid as per the disability.
Following table details the percentage of the rider cover given against the specific accidental disability.

3. Critical Illness Rider
If the life assured is diagnosed to be suffering from a major critical illness like heart attack, cancer, stroke, major organ or marrow transplant, the insurer pays 100% of the rider sum assured on survival of 30 days post confirmation of diagnosis of the above-mentioned critical illnesses.

Often, such critical illnesses lead to life’s eventuality. However, in a case where the life assured survives after being diagnosed with a critical illness, the rider cover comes to rescue the assured with some income. This money comes handy which can be utilized for monthly house-hold expenses or to cover medical expenses. The insurer compensates the life assured after 30 days of waiting period post confirmation of being diagnosed with any of the mentioned critical illnesses in the critical illness rider plan.

In today’s fast-moving life, with or without any medical history, anyone can be a victim of such life-threatening illnesses. Thus, it is advised to provide an additional protective shield with a critical illness rider. It is highly recommended to those who are unable to live a healthy lifestyle or living a stressful life.

4. Waiver of Premium
If you bought a standard term plan without the waiver of premium rider and are unable to pay future premiums due to a critical illness, illness of specific severity, or total and permanent disability due to an accident, your future premiums won’t waive off, consequently, the insurance policy terminates.

In such cases, the waiver of premium plays a crucial role.

In case of an accident or illness of specific severity as mentioned in the rider plan which causes total and permanent disability to life assured due to which the life assured is unable to continue to pay future insurance premiums, this rider helps to waive off premiums, while the policy still stays in force.

It is recommended to opt for a waiver of premium rider as it will keep the policy in force in a situation where the life assured is unable to pay future premiums due to permanent disability, critical illness, or illness of specific severity as per the rider plan.

5. Hospital Cash Rider
WIth a hospital cash rider, the insurer provides daily hospital cash benefit, ICU benefit, and recuperating benefit as a lump sum in case of hospitalization.

It is a smart decision to opt for a hospital cash rider to cover medical treatment expenses as hospital expenses are too high nowadays. With an additional financial aid covered by such a rider at a nominal premium is comforting to the pocket in case of hospitalization.

6. Surgical Care Rider
If the life assured needs to undergo a medically necessary surgery in India for a minimum period of 24 hours hospitalization, with surgical care rider, a lump sum benefit will be paid. The coverage benefit varies for a major and minor surgery case.

The rider sum assured will be 50 times of the benefit amount chosen at the time of policy rider purchase. The minimum benefit amount is INR 3,000 and maximum INR 30,000. Therefore, the rider sum assured will be minimum INR 1,50,000 and maximum INR 15,00,000.

Few things to keep in mind about the surgical care rider are described in the following table:

You can provide a financial shield with this surgical care rider in case of major and minor surgical hospitalization.

There are numerous benefits of term insurance riders that come at an affordable premium. But there’s more to term insurance riders as they also help you in saving tax.

Tax benefits of term life insurance riders:

• Under Sec 80C: You can avail tax exemption under Sec 80C for the premium paid towards the accidental death benefit rider or for any other term insurance riders.
• Under Sec 80D: You can avail tax exemption under Sec 80D for the premium paid towards the critical illness benefit rider or other health-related term insurance riders.

Term insurance riders are optional paid features to enhance your term insurance coverage in rider-specific cases. Term plan riders are not heavy on the pocket but provide additional financial shield to your family.

But adding riders to your term plan for your family to leave behind an enormous amount is a smart decision and it is often advised by financial experts.

You can always opt for a standard term insurance plan without any rider, however, god forbid, if you are diagnosed with a critical illness or suffer a permanent disability, handling such a situation would be difficult for your family to pay the premium or to cover household monthly expenses, your kid’s education, or paying a home loan without any financial support.

Thus, to ensure you have a safety net in such uncertain scenarios, a term insurance plan with riders is one of the best financial helping hands you can choose. Have any queries? Let us know. We will be more than happy to help you in clearing all your doubts regarding term insurance riders.